Déjà Vu "Oil" Over Again The logic of "oil"--its role in the reconstruction of Iraq and the stability of the region--is one of the most striking framing issues in the ISG Report. In the past when the Bush administration talked...

Déjà Vu "Oil" Over Again
The logic of "oil"--its role in the reconstruction of Iraq and the stability of the region--is one of the most striking framing issues in the ISG Report.

In the past when the Bush administration talked about the transformation of the Middle East, they invoked an ill-defined idea of "democracy." Once established as a "democracy," so the Bush logic goes, Iraq would spread freedom throughout the region like a virus.

In the ISG report, the frame has shifted to the idea of a stable Iraq that must be built. And the key to that stability is a national unity based on oil.

Ret-"Oil"-ing the Economy
It should be no surprise that a commission led by James Baker should suggest that the key to all of Iraq is oil, but it is well worth understanding how the ISG frames Iraq using oil.

At first glace in the report, it seems that oil is merely the key to restarting the economy in Iraq, as suggested in this paragraph from page 21:

There has been some economic progress in Iraq, and Iraq has tremendous potential for growth. But economic development is hobbled by insecurity, corruption, lack of investment, dilapidated infrastructure, and uncertainty. As one U.S. official observed to us, Iraq’s economy has been badly shocked and is dysfunctional after suffering decades of problems: Iraq had a police state economy in the 1970s, a war economy in the 1980s, and a sanctions economy in the 1990s. Immediate and long-term growth depends predominantly on the oil sector.

Iraq's new economy, in other words, will emerge through investment in a new infrastructure of corporations that can manage the oil sector. So far, this seems like straight-up Bush family logic: a hierarchical society with oil at the top. It worked for everyone in the Bush administration--ergo, it should work for Iraq. The end result would be the emergence of a mega-wealthy oil class in Iraq that would also be the ruling class, and would subsequently join the ranks of global conglomerates in Texas, Saudi Arabia, Kuwait, and the UAE.

Enough with the Iraqi civil war, the ISG is saying. If we want peace, let's get down to the old-fashioned business of making oil billionaires.

Constitution-"Oil" Crisis
In a section of the report titled "The Politics of Oil" (pages 22-23), we see for the first time that the big problem created--and potentially solved--by oil is not just a lagging economy, but national unity itself:

The politics of oil has the potential to further damage the country’s already fragile efforts to create a unified central government. The Iraqi Constitution leaves the door open for regions to take the lead in developing new oil resources. Article 108 states that “oil and gas are the ownership of all the peoples of Iraq in all the regions and governorates,” while Article 109 tasks the federal government with “the management of oil and gas extracted from current fields.” This language has led to contention over what constitutes a “new” or an “existing” resource, a question that has profound ramifications for the ultimate control of future oil revenue.

This passage is worth pausing over to think about what it is saying. The new Iraqi constitution created with the help off the Bush administration--which is to say: the new Iraqi constitution forced on the Iraqi government by the Neo-Cons who run the Bush administration--has an article about oil that is fueling national tension.

The Iraqi constitution, in other words, is creating problems because of how it defines the ownership of oil.

The big problem is that the Iraqi constitution actually allows for different regions to be proactive in capitalizing on their oil reserve, thereby creating competition between regions for their wealth. Big problem. Why would anyone in the oil rich region of the north want to join in the mess of the multi-sided civil-war-cum-U.S.-bloody-occupation in the south, when they can just make money selling oil?

But, according to the ISG, this Article 108 of the Iraqi constitution must be dealt with so that oil is no longer something that rips Iraq apart, but a resource that brings together the Iraqi people. Oil, in other words, must be the key to unity, not division.

And, hence, we get to the heart of the ISG report--the key to the whole darn thing: oil is unity.

The New Centr-"Oil"-ized Corporate Sector
The pragmatic recommendations of the ISG report vis-à-vis oil are focused entirely on creating a centralized oil production economy that channels all oil production to the state, then divides the profits up along two lines: (1) profit amongst new captains of the oil industry and (2) profit sharing amongst ordinary Iraqi citizens.

Think Alaska in the desert. To create a stable nation, the ISG argues, Iraq must establish new corporations with new managers charged with running the oil industry, who in turn funnel oil profits towards the government, who in turn pay out a percentage to each citizen.

Kurdish, Shia, Sunni--who cares! Once the new oil sector is built, all Iraqis will get their oil revenue checks. Oil profits, thus, become the great leveller, the grand bringer of peace.

But those profits do not arrive on their own. Somebody needs to help the Iraqis set up these new industries--the United States of America. To see exactly how much work the ISG proposes, it is worth reading all of Recommendation 62 and 63in the ISG report

RECOMMENDATION 62:
• As soon as possible, the U.S. government should provide technical assistance to the Iraqi
government to prepare a draft oil law that defines the rights of regional and local governments
and creates a fiscal and legal framework for investment. Legal clarity is essential to attract -
investment.
• The U.S. government should encourage the Iraqi government to accelerate contracting for the
comprehensive well work-overs in the southern fields needed to increase production, but the
United States should no longer fund such infrastructure projects.
• The U.S. military should work with the Iraqi military and with private security forces to
protect oil infrastructure and contractors. Protective measures could include a program to
improve pipeline security by paying local tribes solely on the basis of throughput (rather than
fixed amounts).
• Metering should be implemented at both ends of the supply line. This step would
immediately improve accountability in the oil sector.
• In conjunction with the International Monetary Fund, the U.S. government should press Iraq
to continue reducing subsidies in the energy sector, instead of providing grant assistance.
Until Iraqis pay market prices for oil products, drastic fuel shortages will remain.
Long Term
Expanding oil production in Iraq over the long term will require creating corporate structures,
establishing management systems, and installing competent managers to plan and oversee an
ambitious list of major oil-field investment projects.
To improve oil-sector performance, the Study Group puts forward the following
recommendations.
RECOMMENDATION 63:
• The United States should encourage investment in Iraq’s oil sector by the international
community and by international energy companies.
• The United States should assist Iraqi leaders to reorganize the national oil industry as a
commercial enterprise, in order to enhance efficiency, transparency, and accountability.
• To combat corruption, the U.S. government should urge the Iraqi government to post all oil
contracts, volumes, and prices on the Web so that Iraqis and outside observers can track
exports and export revenues.
• The United States should support the World Bank’s efforts to ensure that best practices are
used in contracting. This support involves providing Iraqi officials with contracting templates
and training them in contracting, auditing, and reviewing audits.
• The United States should provide technical assistance to the Ministry of Oil for enhancing
maintenance, improving the payments process, managing cash flows, contracting and
auditing, and updating professional training programs for management and technical
personnel.

In other words, the United States will transform its military occupation into a management occupation.

We would help the Iraqis set up this new oil industry, and in turn--well...this is obvious--the United States would become customer "numero uno" to this new oil industry. We teach the Iraqis how to use corporations to turn oil reserves into billionaires, and a few close friends of the Bush family get to call the new Iraqi oil tycoons "cousin"--just like Saudi Arabia.

We the Peop-"Oil"
The core frame we get from the ISG report is something that looks like this:

[oil] is [national unity]

Whereas Iraqis are fighting amongst themselves for land and power along lines of old religious and territorial lines, the ISG would transform the entire region into a peaceful zone where everyone imagines themselves as part of the same community of oil.

And hence, whereas the Neo-Cons saw themselves as creating an free market garden of eden that would transform Iraq, the Middle East and the world, the ISG has proposed creating an oil nationalism that would transform Iraq, the oil tycoons of Texas and Saudi Arabia, and the oil tycoons of the world (who mostly live in Texas and Saudi Arabia).

Saudi Arabia 2.0 is what we would get: an oil nation run by immoral princes with special relationships to oil conglomerates in the U.S.

Would we get peace? Well, I suppose it would be very peaceful inside an Iraqi oil tycoon's palace.

Comments

Déjà Vu "Oil" Over Again
The logic of "oil"--its role in the reconstruction of Iraq and the stability of the region--is one of the most striking framing issues in the ISG Report.

In the past when the Bush administration talked about the transformation of the Middle East, they invoked an ill-defined idea of "democracy." Once established as a "democracy," so the Bush logic goes, Iraq would spread freedom throughout the region like a virus.

In the ISG report, the frame has shifted to the idea of a stable Iraq that must be built. And the key to that stability is a national unity based on oil.